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Credit Insights

Investors Regain Appetite for Corporate Bonds Following Pre-Thanksgiving Diet

Dipping toes back into the high-yield asset class.

In the weeks leading up to Thanksgiving, investors put themselves on a corporate bond diet, sending credit spreads wider. However, investors have now returned to the table and have not only feasted on the new issuance brought to market last week, but bid up prices in the secondary markets, tightening corporate spreads across the marketplace. New issuance in the investment-grade market was brisk, but the new transactions were easily digested. In the high-yield market, according to Bloomberg, new issuance saw the greatest weekly volume since September and the fourth-largest weekly amount priced this year. The average spread of the Morningstar Corporate Bond Index (our proxy for the investment-grade bond market) tightened 2 basis points to +101, and the BofA Merrill Lynch High Yield Master Index tightened 4 basis points to end the week at +363.